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Retirement Plans Newsletter

October 5, 2010

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[Official Guidance]
New Law Allows In-Plan Rollovers to Designated Roth Accounts
Excerpt: "The Small Business Jobs Act of 2010 permits employers to amend their §401(k) or §403(b) plans to allow participants to transfer an eligible rollover distribution (ERD) into their designated Roth account in the plan if the transfer is of an ERD: 1. made after September 27, 2010; 2. from a non-designated Roth account in the same plan; 3. because of an event that triggers an ERD from the plan; and 4. otherwise meets the rollover requirements."
(U.S. Internal Revenue Service)

[Official Guidance]
DOL Amicus, in Support of Plaintiffs-Appellants and Requesting Reversal in Renfro v. Unisys
Excerpt: "Argument: I. Allegations that fiduciaries imprudently selected investment choices that charged excessive fees in relation to the services provided plausibly state an ERISA claim for fiduciary breach II. ERISA section 404(c) does not provide a defense to defendants' alleged imprudent selection of investment options with excessive fees'
(U.S. Department of Labor)

[Guidance Overview]
DOL's Interim Final Rule Requires Detailed Fee Disclosure (PDF)
3 pages. Excerpt: "Plan fiduciaries will be able to obtain the information necessary to make informed decisions regarding services rendered to and expenses paid from the plan. That's the goal of the interim final rule relating to fee disclosure that [EBSA] issued on July 16. [Note: This article was originally written for and was published in Thompson Publishing Group's Pension Plan Fix-It Handbook and is published/reproduced with the permission of the Thompson Publishing Group.]"
(ERISAdiagnostics Inc.)

[Guidance Overview]
Employee Benefits Provisions of the Small Business Jobs Act of 2010 (PDF)
Excerpt: "[For] plan years beginning on or after January 1, 2011, governmental 457(b) plans may permit Roth contributions, as well as [Roth conversions]."
(Bryan Cave LLP and Affiliates)

[Guidance Overview]
'In-Plan' Roth Conversions (PDF)
3 pages. Excerpt: "The new Roth conversion feature raises a number of open issues including the scope/timing of the plan amendment, the applicable sourcing and basis allocation rules, the application of the five year holding period for tax-free treatment, reporting and withholding rules, and investment direction issues. Guidance is necessary to properly implement this provision and the timeframe for action is tight."
(Groom Law Group)

Social Security Administration: Management Oversight Needed to Ensure Accurate Treatment of State and Local Government Employees
Excerpt: "Recommendation: To improve SSA's management oversight of retirement benefits for public employees, the Commissioner of Social Security, in consultation with IRS, state administrators, and public employers, should develop procedures for monitoring the accuracy of Social Security earnings records. This could include (1) improving data collected on public employers, (2) identifying risk factors using existing SSA information and IRS audit findings"
(U.S. Government Accountability Office)

401(k) Plan Sponsors Remain Undecided on the Wisdom of Guaranteed Income Products
Excerpt: "Over the last several years, leading insurers such as Prudential, MetLife, John Hancock, The Hartford, GreatWest and Genworth Financial have introduced a new generation of variable annuities, or 'lifetime income products,' for 401(k) plans."
(Employee Benefit News; free registration required)

The 401k Exchange President Shares View of the Issues Driving Today's Market.
Excerpt: "What trends and developments are affecting the 401(k) market? Where are the opportunities for building more business? What does the Obama administration have in store for 401(k) plan sponsors and advisers?"
(Employee Benefit Adviser; free registration required)

Philadelphia Can Repeal DROP, But Outcome of Court Challenge Uncertain
Excerpt: "[The Philadelphia City Solicitor]'s 13-page assessment says a sentence in the 1999 law stating that DROP 'will continue under the same terms indefinitely unless and until further amended by City Council' means Council has the right to repeal it."
(The Philadelphia Inquirer)

EBSA Response to DOL's OIG Report: 'EBSA Needs to Do More to Protect Retirement Plan Assets From Conflicts of Interest' (PDF)
2 pages. Excerpt: "[EBSA] not only agrees with the recommendations included in the report, we are committed to completing work on both recommendations at the earliest possible date."
(U.S. Department of Labor, Office of Inspector General)

Summary of Report: 'EBSA Needs to Do More to Protect Retirement Plan Assets from Conflicts of Interest' (PDF)
1 page. Excerpt: "The narrow definition of a fiduciary and the lack of regulations dealing with conflicts of interest has hampered EBSA's enforcement program."
(U.S. Department of Labor, Office of Inspector General)

EBSA Needs to Do More to Protect Retirement Plan Assets from Conflicts of Interest (PDF)
29 pages. The OIG recommended that EBSA broaden the definition of a fiduciary for investment advisers, and develop regulations requiring disclosure of all conflicts of interest and consideration of conflicts of interest in selection of service providers.
(U.S. Department of Labor, Office of Inspector General)

Defined Benefit Plan Funded Status Up for Quarter, but Down for Year
Excerpt: "Mercer said t he deficit in pension plans sponsored by S&P 1500 companies decreased by $79 billion to $428 billion at the end of September according to its figures. This deficit corresponds to a funded status of 76%, compared to a funded status of 71% at the end of August and 84% on December 31, 2009."

The Financial Engines National 401(k) Evaluation: Who Benefits from Today's 401(k)? (PDF)
54 Pages. Excerpt: "[This edition of the] Evaluation includes a retirement income section that attempts to determine how close . . . participants are to achieving their retirement income goals . . . ."
(Financial Engines)

Corporate Pension Funds Look to Alternative Investments for Funding Boosts
Excerpt: "Alternative investments, such as hedge funds, private equity, and real estate, are slowly gaining sway with corporate pension fund managers."

Public Pension Funding Levels for All 50 States
Excerpt: "Data is for states' respective fiscal year ends, current as of August 20, 2010. Percentages were calculated by dividing the fair value of plan assets by the projected benefit obligation."
(Bloomberg Businessweek)

Michigan Public School Employees Retirement System Gets Hybrid Plan Up and Running
Excerpt: "Pension reform legislation passed in May places all MPSERS employees hired after July 1 in the new plan, which combines the 'best practices' of defined benefit and defined contribution plans . . . ."
(Pensions & Investments; registration may be required)

Cities in Debt Turn to States, Adding Strain
Excerpt: "Harrisburg, the capital of Pennsylvania, dodged financial disaster last month by getting money from the state to make a payment to its bondholders. It did so even though the state warned that the money had to be used for city workers' pensions."
(The New York Times; free registration required)

Should Public Retirement Plans be Fully Funded?
Excerpt: "A common argument for full funding is that pensions are a form of deferred compensation that does not justify a debt. The paper examines public finance, political economy, and financial market issues that bear on optimal funding, broadly and in a series of models."
(National Bureau of Economic Research: paid subscription or individual purchase required to retrieve fulltext)

New York Pensions Set Return Expectations Too High at 8%, Mayor Bloomberg Says
Excerpt: "'It's much too high an assumption for us, I think it should be lowered,' Bloomberg said today at a news briefing, referring to the city's five pensions holding almost $104 billion. 'That's going to require the city to put in more money."
(Bloomberg L.P.)

A Suggestion for a Fiduciary Standard for DC Annuity Purchases
Excerpt: "I suggest that no fiduciary standard can require a conclusive prediction of the future, and that it is probably even a misapplication of the safe harbor to read it that way. The ERISA standard is not prescience, but prudence: 'with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.'"
(Business of Benefits)

The Fiduciary Process is Only As Good As the Questions Asked
Excerpt: "A recent court case decision in California threatens to 'upset the applecart' with regard to accepted fiduciary practices. Although all but one charge was dismissed, the plaintiffs did score a win that might surprise you."
(, LLC)

Successful Retirement May Depend on How Well You Steer Clear of Five Key Retirement Roadblocks
Excerpt: "By carefully understanding all five of these roadblocks and most importantly, how they affect you and your retirement, you can remain vigilant, and avoid succumbing to any one or combination of these forces. Some of these issues can never be completely eradicated, but by planning and implementing a goal-oriented strategy, you can start to realize a dramatic improvement."
(U.S. News & World Report)

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Benefits in General; Executive Compensation

Tax Recommendations from President's Advisory Board Would Affect Retirement and Health Accounts
Excerpt: "A report from the President's Economic Recovery Advisory Board . . . outlines tax reform options, including some with implications for retirement, health care and education savings accounts. [The Board] was charged with evaluating the advantages and drawbacks of measures to simplify the tax code, increase tax compliance and reform corporate taxes."
(Towers Watson)

Starbucks is Pleasing Employees and Pouring Profits
Excerpt: "Full health-care benefits (medical, dental, vision and alternative services) are offered to all employees, including part-timers who work at least 240 hours per calendar quarter. The EAP is available to all employees. Employees share in the company's growth via 'Bean Stock' (stock options) of up to 14 percent of their gross pay, and a stock-investment plan allows them to buy shares of Starbucks common stock at a discount . . . ."
(Workforce Management; free registration required)

Aon Hewitt and Aon Corp. Fact Sheets
Excerpt: "Aon Corporation (NYSE:AON) announced that it has completed its merger of Hewitt Associates, Inc. with a subsidiary of Aon, creating Aon Hewitt, the world's premier human capital solutions firm."
(Aon Hewitt)

Record Number of Companies Rated in HRC's 2011 Corporate Equality Index
Excerpt: "[The Index scores] 30 specific policies and practices covering nearly every aspect of employment for LGBT workers from non-discrimination protections and the training surrounding those policies to domestic partnership and legal dependent benefits to gender transition guidelines and LGBT employee resource groups."
(The Human Rights Campaign)

Webcasts and Conferences

An Introduction to 401(k) Basics
in California on November 2, 2010
presented by Actuarial Consultants, Inc.

Annual Plan Administration- Retirement Plan Basics Update 2010
in California on November 2, 2010
presented by Actuarial Consultants, Inc.

Complimentary Update - Form 1099-R Penalty Changes
Nationwide on October 4, 2010
presented by Convergent Retirement Plan Solutions, LLC

How Can You Better Manage Pension Risk? Webcast
Nationwide on October 5, 2010
presented by Mercer

Learn about's 1099 Software
Nationwide on October 13, 2010
presented by

Press Releases

ASPPA Enhances Service Provider Certification
American Society of Pension Professionals & Actuaries (ASPPA)

Newly Posted Employee Benefits Jobs

Plan Administrator/Consultant
for Texas TPA/Consulting Firm
in TX

Director of Business Development
for Tegrit Group
in MI, OH

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